eThesis - Kauppakorkeakoulun sähköiset gradut

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The purpose of this study is to explore the individual and collective experience of different types of small business failures (i.e. not business closure) and, subsequently, to explain how individual and collective learning from failures takes place in the development of new start-ups. Embedded in the literature on failure and learning, the empirical analysis is based on 20 in-depth interviews with members from two Finnish startups (Tuxera and Bitbar) and it applies the Gioia-method to explore and generalize - individual and collective - patterns of sense-making of, and learning from, entrepreneurial failures. The study's main findings show that, in startups, other individuals besides the entrepreneur experience entrepreneurial learning, and that this learning process takes place at both individual and collective levels. In addition, the analysis identifies five major learning patterns: (1) learning through doing (key actions: experimenting, failing, and persisting), (2) learning through measuring (key actions: adjusting and balancing), (3) learning through communicating (key actions: understanding, trusting, sharing and encouraging), (4) learning through prioritizing and (5) learning through reflecting. The study concludes that these learning practices help individuals and collectives to grow an entrepreneurial mindset, which play an important role in managing three critical challenges: (1) acquirement of long-term influential customers, (2) continual development of high quality innovative and (3) satisfying a growing number of customers with scarce resource.